Smartgroup Corporation Ltd (SIQ) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to the 2023 Annual General Meeting of Smartgroup Corporation Limited. I am Michael Carapiet, Chair of the Smartgroup Board. I'd like to begin by acknowledging the traditional custodians of the land on which we meet today, the Gadigal people of the Eora Nation. I pay my respects to their elders, past, present and emerging, and extend that respect to all Aboriginal and Torres Strait Islander people here today. It is now 11:00 a.m., the nominated time for the meeting. I've been advised by the company's secretary that a quorum is present, and so I'm pleased to declare the meeting open. The notice of meeting was given to shareholders and lodged with the ASX on 6 April 2023. I propose to take the notice as read. This year's AGM has been convened as a physical meeting only rather than hybrid meetings that we have had for the last 3 years. We're also providing a video webcast of the meeting for shareholders, who prefer to view the proceedings of the meeting remotely, and I welcome all of our shareholders, who are now logged on to the webcast. Joining me here today in Sydney are Gavin Bell, Non-Executive Director and Chair of the Human Resources and Remuneration Committee; Deborah Homewood, Non-Executive Director; Anne McDonald, Non-Executive Director and Chair of the Audit and Risk Committee; Carolyn Colley, Non-Executive Director and Chair of the IT and Innovation Committee; Tim Looi, Managing Director and Chief Executive Officer; Ian Watt, Non-Executive Director and Chair of the Environment, Social and Governance Committee; John Prendiville, Non-Executive Director and Deputy Chair of the Board; and Sophie MacIntosh, Chief Legal and Sustainability Officer and Company Secretary. Joe Sheeran, the audit partner from our auditor, PricewaterhouseCoopers, is also present here today and will be available to answer questions from shareholders at the appropriate time in the meeting. I will make some brief comments about the company's performance in 2022 and so far in 2023 before handing over to Tim to take you through these matters in more detail. I'll remind shareholders that our 2022 annual report is available from the Investors section of our website. Smartgroup's 2022 financial result was a great, again, adversely impacted by the ongoing challenges of a significantly delayed vehicle supply chain and higher operating costs. Recorded revenues of $224.7 million, EBITDA of $93.4 million and NPATA of $61.2 million. Revenue was in line with 2021, while EBITDA and NPATA were down 9% and 12%, respectively. Operating cash flow generation remained high at 117% of NPATA, compared to 113% of NPATA in the previous period. Novated leasing leads and the vehicle order delivery pipeline continued to expand throughout 2022, and this trend has continued into 2023. We remain optimistic that 2023 will bring some improvement of the global vehicle delivery supply chain, which will both release the significant delayed revenue we have in connection with this pipeline as well as alleviate some of the pressure on our team, who are currently dedicating more resourcing to managing this pipeline. We were pleased to secure a number of new large and medium-sized organizations as clients throughout 2022. We renewed or extended the majority of the top 20 contracts that fell due in 2022 with 1 notable loss. We have continued this progress in 2023, and Tim will provide a further update on the business in his presentation. The introduction of the Federal Government Electric Car Discount Policy in November 2022 provided a substantial benefit to our customers, who transitioned to a novated lease of an electric vehicle. Our teams have been working hard to ensure we are well positioned to support our customers to take advantage of this benefit and to easily transition into an electric vehicle. We are pleased with the high interest and engagement levels we have seen from our customers since the introduction of this policy. Delivery of our Smart Future assets continued in 2022, with the successful go-live of our new Smartsalary website, a new salary packaging calculator and a customer contact and journey tool. In early 2023, we followed this with the launch of our Car Leasing Portal, which facilitates a complete online solution for our customers from quote through to credit, allowing our customers to interact with us at any time of day or night. We were very proud to formally endorse our first sustainability strategy in 2022, demonstrating our commitment to a smarter, more sustainable tomorrow. This strategy includes a range of initiatives and targets, including our commitment to net zero from our direct operations by 2030 as well as a range of initiatives supporting the uptake of electric vehicles and the transition to a low emissions future for Australia. Since listing in 2014, Smartgroup has delivered good returns for shareholders, both in capital appreciation as well as fully franked dividends with approximately $448 million being returned to shareholders in fully franked dividends and an increase in market capitalization from approximately $160 million to approximately $940 million today. This slide demonstrates the strong history of value that Smartgroup has delivered to its shareholders over this period. In early 2023, we announced Tim Looi's intention to retire after 14 years with Smartgroup. Today will be Tim's last AGM with Smartgroup, and the Board would like to take this opportunity to extend our sincere thanks to Tim for his service and dedication to Smartgroup. Tim has been an important part of the Smartgroup journey, and we wish him all the very best for his future. Tim will be succeeded by Scott Wharton, who will join Smartgroup as our new CEO and Managing Director on 17 July 2023. Scott comes to us with an impressive background and experience, and we are optimistic about the future of Smartgroup under its guidance. In conclusion, I would like to thank Tim, the entire management team and all of our employees for their hard work and strong focus throughout 2022. I would also like to thank our loyal clients, suppliers and shareholders for their ongoing support and to take this opportunity to thank my fellow Nonexecutive Directors for their continued commitment and guidance. I will now hand over to Tim.

Thanks, Michael, and good morning, everyone. I'll first introduce Smartgroup, and then I'll recap our 2022 financial results as well as providing more recent updates on novated leasing. I'll give some details on the early successes we're seeing with the Smart Future program as well as the demand or interest in electric vehicles. And finally, I'll comment on how the business is currently tracking. So Smartgroup's investment proposition is one -- sorry, is that we're one of Australia's leading employment management services business. We have 740 team members, manage around 370,000 customers and 84,000 cars both in novated and in fleet. So our investment proposition is underpinned by our capital-light business model. So it's through this business model that we're able to generate strong free cash flows and pay fully franked dividends to shareholders. Now more recently, we have seen government legislation supporting the adoption of electric vehicles through novated leasing. So the transition to electric vehicles is at an early stage, and Smartgroup should be a beneficiary as electric vehicles increase in popularity. So one of Smartgroup's key strengths is the long-term relationships we have with employee clients across a range of sectors. So our top clients have been with us, in some cases, more than 15 years. Many of our clients operate in attractive segments. Now 46% of our customer base comprised of not for profits. These are national, the state, the local-based aged care, disability care and other charitable organizations. So public and private hospitals account for around 24% of our clients, and government and education around 27%. So these segments have exhibited good and consistent employment growth. And currently, they have a long list of vacancies to be filled. There are thousands of open roles from teachers to nurses to care workers, creating medium- to long-term participation opportunities for Smartgroup. And our strength as a business comes from the diversity, the experience and the skills of our team members. So we continue to support and encourage diversity as a powerful and distinct part of our culture. We retained our Workplace Gender Equality Agency citation for the third year, and we were also recognized for the fourth year as an Inclusive Employer by Diversity Council Australia. Both is a testament to our focus and efforts over multiple years. As mentioned by Michael, we also committed to our first formal sustainability strategy last year, including a range of initiatives and targets. We've made a commitment to reach net-zero carbon emissions in our direct operations by 2030, and we have rolled out a range of initiatives to play our part in driving the uptake of electric vehicles in Australia. And our service performance was again recognized by Customer Service Institute of Australia, the peak body for service quality with nominations and winners in multiple categories. And the work done by the Smartgroup Foundation reinforces our commitment to supporting the not-for-profit sector and the communities that we work with and service. The foundation in its fourth year supported 17 organizations and their grassroot projects. I'll now offer some comments to recap on our performance in 2022 together with an operational update on novated leasing. Now 2022 was a mix year for Smartgroup as we managed through another year of challenging headwinds in the form of vehicle supply chain disruption, a tight labor market, high inflation and a rapid rise in interest rates from May 2022 onwards. Now despite these challenges, the business has had a steady operational performance with a strong focus on service excellence and tech deployment. The summary for 2022 is as follows: firstly, we delivered NPATA of $61.2 million. Revenue was up $224.7 million, a little bit higher than the prior corresponding period. Meanwhile, EBITDA and NPATA were lower than pcp, which really reflected the continued car supply constraints and the higher operating costs. Second, we were able to generate strong leasing demand and interest throughout 2022. Leasing leads grew by 14%, with digital being the most significant growth channel. We also recorded a further 25% growth in the excess new lease vehicle order pipeline. And thirdly, we saw some strong interest in demand for electric vehicles, supported by the passing of the Federal Government Electric Car Discount Policy late last year. I'll give the latest update on EVs a little bit later. Fourthly, we continue to make good progress on the Smart Future program. During 2022, a number of new digital assets were delivered, including our new website and a packaging calculator. And later on, I'll give more details on the data that we're seeing and the trends we're seeing from these digital assets. And finally, our capital-light business model means we generated a free -- sorry, a strong level of free cash flows. After-tax operating cash flows, again, were over 100% of NPATA. And our strong financial position allows us to pay and -- declare and pay dividends of $0.46 per share, fully franked, representing a payout of 100% of our profits. So I'm pleased to report that in quarter 1 2023, we're seeing a continuation of strong leasing leads. That total leasing leads, compared to the prior corresponding period, up 31%. Digital channel growing by 42%. Leasing quotes, new lease orders, settlement volumes and yields are all showing good growth compared to prior corresponding period. And just as importantly, we're working through an open leasing leads, which are up 55% from pcp. And despite the continuation -- continued tightness of vehicle supply -- of the vehicle supply market, settlement volumes increased 12% versus pcp, and our excess vehicle order pipeline grew by another $1 million to $16 million. The total revenue pipeline for vehicle orders now sit at $20 million. Now leasing yields improved by 3% despite new novated leases as a percentage of total novated volumes being lower at 73% versus the historical level of 78% to 80%. So if we're successful at closing these open leads, we will recognize the revenue when the vehicle is delivered. Given the extended delays in vehicle delivery time frames, revenue from these leads should largely flow through in half 2 2023 and into early next year. Now turning to the next slide, this graph shows the increase in the time frame for the average vehicle order to delivery for Smartgroup's top 30 car models. As you can see, there has been a significant increase in the time frame over 2021 and the first half of 2022. There was little change to vehicle delivery time frames in the second half of '22. And unfortunately, the delivery time frame has not improved in '23. However, there are some variation by makes and models. Now the current average delivery time frame for our top models is much longer than it was -- than 2021 and pre-COVID. The lengthy and also changing delivery schedules, have caused additional work in our sales pipeline management in the form of credit reapprovals and administration work. Given the continued delays, the leasing team resourcing has been increased to meet this additional workload. As supply vehicle improves, we will see the required resourcing reduce as there will be less need to speak to customers about changing delivery dates and to re-perform customer credit assessments. Now moving to the next slide, this graph shows vehicle orders are running -- continuing to run above vehicle deliveries. We have also seen the decision time extending by around 20%. The revenue from this excess vehicle order pipeline represents high-margin future revenues as most of the costs have already been incurred. Now this revenue will be recognized as and when vehicle deliveries normalize and those vehicle settlements are completed. At this stage, we expect supply constraints to continue in the near term. Now let's talk about Smart Future. Now Smartgroup has around 3,700 clients, employing well over 1 million people across thousands of locations throughout Australia. Now our Smart Future aims to provide a great customer experience, enabled by technology and delivered by engaged team members to continue to be the trusted partner for our clients and, in turn, grow and build scale within our business. Now if we're able to do this, it will deliver us more customers at a lower cost of acquisition as well as deliver a better experience and service, lowering the cost to serve. Let me talk to several of these digital tools that we have launched, and I'll show you the data that we're seeing. So the first one is the -- we're on Slide 19, I think, the first one is the online novated leasing calculator is one of the first interaction points for our customers. This is where individuals educate themselves as well as obtain estimates of tax savings. Now since the launch of Smartleasing and Autopia novated leasing calculators, we've seen significant increases in unique visitations. These visitations are represented by the dotted purple line. Now together with better engagement and education processes, these digital tools have improved our leasing leads significantly. In the case of Smartleasing, that outpaced the growth in visitations. So both statistics demonstrate the importance of not only digital, but also customer engagement. Now the new Smartsalary website and a salary packaging calculator went live about 10 months ago. Now since going live, we have seen consistent growth in user sessions as well as strong growth in customers educating themselves on the benefits of salary packaging. That, in turn, is reflected in a 17% increase in salary packaging sign-ups through lead from the website. And next, a single and integrated appointment booking system was rolled out by our Customer Education workforce in half 2 2022. The appointment system segregates customers into different journeys based on their individual requirements. As you can see on the chart, this tool has assisted our education consultants to drive more customer enrollments, lifting productivity and increasing effectiveness. Now turning to Slide 22, in late February this year, we launched our Car Leasing Portal to about 100 pilot clients. These pilot clients historically contributed about 9% of all leasing quotes. Now the Car Leasing Portal is designed to enable our customers to interact with us after hours, expanding, extending the sales opportunity cycle. Whilst it's early days, we are seeing some encouraging data points and successes from the portal with good interactions and usage outside of business hours. More importantly, quote volumes from these pilot clients increased 23% versus pcp. Just a couple of weeks ago, we've launched it to another 100 clients, and the plan is to progressively roll it out to all our Smartleasing clients in 2023. Now turning to Slide 23. The introduction of the Federal Vehicle -- Electric Car Discount Policy in November '22 will provide substantial savings to our novated leasing customers. So we're excited to help our existing customers and new customers as they start their journey into an electric vehicle, and we are well prepared to ensure that the transition is seamless, it's simple and it's cost effective. It's only been several months since the legislation was passed, and we have already seen strong demand coming from all segments of our customer base. Now turning to the next slide, we have updated some of the graphs that will be used for our 2022 full year results to show the most recent interest in electric vehicles in the first quarter. So there are some key points to highlight. Firstly, interest in electric vehicles is accelerating. As you can see from the top chart, Q1 2023, EVs as a percentage of all the quotes we get is nearing 25%, up significantly from Q4 2022 and also the pcp period. The bottom chart shows that EV quotes in just Q1, the first 3 months of 2023, across all our segments are close to our total EV quotes for the whole of 2022. It also shows that EV interest is coming from all segments of the client base, but particularly in the first couple of months from government, from corporates and the health sector. EV orders as a percentage of total new vehicle orders are around 21% or 1 in 5 cars in the first 3 months of this year. And as more EVs are launched over the course of this year and the next, we expect these EVs to be at different price points, enabling more customers from different segments to start their journey into an electric vehicle. Already, we're seeing more and differing manufacturers announcing their interest to supply electric vehicles. This will be an exciting space of Smartgroup over the coming years. And turning to Slide 27, we're pleased with our progress into Q1 2023. Our salary packages and novated lease numbers are stable, and we've continued with several new client wins. None of these wins are material, but it does demonstrate good momentum. We're also happy to report that we have some good wins in fleet. And operationally, we continue to see high level of inquiries and open leads. Now it's imperative that we are able to deal with these leads well. And if we are successful, a proportion of these leads will convert into vehicle deliveries in half 2 and into next year. Unfortunately, as I said, vehicle delivery time frame remains static, though there are some improvements on makes and models. And despite the loss of a major client late last year, it's pleasing to see good growth in revenue in Q1. The growth in revenue and a targeted cost review have offset the negative financial impacts of a higher cost base arising from wage inflation as well as additional resourcing. And currently, the average Q1 2023 NPATA per month is in line with what we achieved in half 2 2022. We have capitalized minimal IT costs and, as per usual, strong cash flow conversion with a low net debt position. Now the business is well positioned to take advantage of improvements in car supply and progress from the investment in digital capabilities as well as the opportunities in electric vehicles. Thank you, Chair, Directors and my executive team members for -- and all team members for all your hard work and dedication in 2022. Now to our clients, our customers, and of course, our shareholders, we would like to convey our appreciation for your ongoing support. As previously announced in February, I will be leaving Smartgroup after 14 years of service once we complete the transition of the role and responsibilities to our incoming CEO, Scott Wharton. Now as I reflect on the last 1.5 decade, I'm thankful for the opportunities and learnings that Smartgroup has afforded me. I will leave this organization with lifelong friends and fond memories of the strong relationships and support from our clients, our customers and our team members for what we're trying to achieve. When Scott starts in mid-July, we will be spending some time together to ensure that there's a smooth transition of leadership. I would also like to convey my appreciation to our Chair, Michael Carapiet, the Board members and the executive team for their wise counsel and their trust in me and our vision for the business. So on behalf of Smartgroup, we are excited about our long-term outlook, and we are looking forward to the opportunities arising over the next 12 months. I'll now hand back to Michael for the formal part of this meeting. Thanks, Michael.

Thank you, Tim. We will now move to the formal part of the meeting. I will start by explaining the arrangements for asking questions and voting on the formal items of business. As this meeting has been convened as a physical meeting, shareholders may only raise questions today from the floor. Only shareholders and proxy holders holding yellow voting cards or blue nonvoting cards will be entitled to ask questions from the floor. Visitors holding red visitor attendance card are not entitled to speak at the meeting. If you wish to raise a question from the floor, could you please hold up your yellow or blue card? We will have 2 roving microphones, and someone will bring one to you. Please identify yourself and, if you are a proxy or representative of another shareholder, the name of that shareholder. You may then ask your question. I ask all shareholders asking questions from the floor to keep your questions short and to the point so that as many shareholders as possible have the chance to ask their questions. We also ask shareholders not to ask more than 2 questions at a time. In the notice of meeting, we invited shareholders who are unable to attend the meeting in person today to lodge questions online before the meeting. I understand from my company secretary that no questions were lodged online before the meeting. We reserve the right to rule out questions that do not relate to the business of the meeting. We will also not answer questions that are substantially similar to questions that have already been answered. Otherwise, we will endeavor to answer as many of the questions asked as we can. In accordance with the company's constitution and as stated in the notice of meeting, as Chairman, I determined that voting on each of the resolutions will be conducted by a poll rather than on a show of hands. In accordance with the company's constitution, the Board has determined that shareholders entitled to vote on a resolution of this meeting may exercise a direct vote on that resolution. The Board has approved rules governing direct voting, which are available on the Investors section of the company's website. Shareholders were given the opportunity to exercise a direct vote before the start of the meeting by lodging the voting form that accompanied the notice of meeting. Shareholders were also able to use the voting form to appoint a proxy to vote on their behalf at this meeting. As set out in the notice of meeting, I will vote all directed proxies in accordance with the directions provided by shareholders, and I will vote all undirected proxies in favor of all resolutions. Shareholders and proxy holders, who are attending the meeting in person today and who have not exercised to vote before this meeting should have received a yellow voting card on entry to the meeting. If you did not receive a yellow voting card, please see the representatives of Link Market Services, who are located at the registration desk just outside this room. Shareholders and proxy holders holding yellow voting cards will be invited to cast their votes on all resolutions by completing the voting cards and placing them in voting boxes. Representatives of Link Market Services will circulate the voting boxes after all resolutions have been discussed and before the poll closes. Shareholders will be asked to consider the 5 resolutions set out in the Notice of Meeting dated 6 April 2023. For each proposed resolution, I will introduce the resolution. There will be an opportunity for shareholders to ask questions on the resolution in line with the process I've just described. I will then put the resolution to the meeting and display a slide showing the total direct votes and proxies received on that resolution before the meeting. As I previously explained, voting on each resolution will be by poll. The poll for each resolution is now open and will close 5 minutes after the end of the meeting. The results of the poll on all resolutions will be released on the ASX company announcements platform and made available on the company's website as soon as possible after the close of the meeting. The first item of formal business is to receive and consider the company's financial statements and reports for the financial year ended 31 December 2022, as set out in the 2022 annual report. This item of business does not require shareholders to vote on a resolution or to formally adopt the reports. Shareholders or their proxies may comment or ask questions about the financial statements and reports or about the management of the company. Shareholders may also ask questions on the company's auditor, PricewaterhouseCoopers, in relation to the conduct of the audit, the preparation and content of the audit report, accounting policies adopted by the company and the independence of the auditor in carrying out the audit.

I will now address any questions relating to this item of business or any other general business questions. Are there any questions from the floor? Yes?

Thanks, Mr. Chairman. [ Philip Arges ] is my name. I'm really impressed that the company has picked up on the EV evolution, because it's really important. But it's got some quite broad implications because there's a much higher capital cost, but the maintenance regime is much lower. And I'm just wondering if the packages are, if we're agile enough to adjust to the quite different way that people use EVs and whether we're broadening our scope of offering to include in the fleet management, for example, things like charging infrastructure and things like that? And then allied to that, We've, of course, got the post-COVID increase in people working from home. We presumably have lower vehicle needs. And then last night, we've got the cap of $20,000 added to the instant asset write-off. So I'm just wondering, is the company will place an agile enough to quickly adapt to those challenges that are quite recent and important for our business?

I'll address the last one first. I think as a broad generalization, we haven't obviously had a chance to discuss this yet, but the budget last night on the whole, I think, would be extremely positive for our clients, because there's quite a lot of assistance going into government sector, the aged care sector, health sector, and that's a big section of our clients. On the electric vehicles, I might pass on to Tim. Tim as to just the service levels, et cetera, and how people are going to use cars?

Thank you. Good question, right? So very simply, very simply, we are pretty well progressed. At the moment, what we're trying to do is, the first thing we're trying to do is create awareness of electric vehicles. The questions we're getting through from potential customers are a little bit different to what we get from a combustion engine. People want to know, look, how do I go about charging a vehicle? How long will it go for, right? What are the typical battery replacement cycle, battery replacement cost? Very different to how we sell leasing today, which is -- which questions are about which cars are right for me. I have a family of 2 with 3 kids under 10, so very different types of questions. So we are fielding, and it's a good thing, we are fielding a lot of inquiries, a lot of interest in electric vehicles. Now on the back end, what we're doing is we're building good relationships with some of these new electric vehicle manufacturers. So there'll be manufacturers that most people have never heard of, Cupra, BYD, Polestar. These are not your traditional combustion engine manufacturers. So as they come into Australia and because through salary packaging and novated leasing, we are a pretty big and strong channel for moving cars. So we're establishing a relationship with these guys. And then on the back end, as you said before, we are creating an ecosystem, just like we did before, just like we do what we have. We have combustion engines for ancillary things, things like service, things like charging units, things like even sometime in the future, selling electricity plants. So those are the things that's in order, but the very, very near-term priority has to be for us to corral, educate potential customers about how we can transition them to electric vehicle cheaper, faster and more seamless. Does that help?

Yes, it does.

My name is Ray, only a small shareholder. I've got 3 questions. So hopefully, the first 2 are very, very simple. The first one, I note in the report 3% of the business was from corporate. Now was this because you've got high standards? You put in the quote. And if it's not accepted, yes, it's not -- yes, it's not profitable, therefore, they don't run with it? Or is the competition too harsh? That's the first question.

Thanks, Ray. Look, very simple, what Ray is referring to, you're referring to the pie chart where we show segmentation where 3% of our customers are from a corporate sector, compared to 40%, 50% from other segments. So very simple, the answer is very simple, right, those represent our current customers, not our potential customers. So we have probably, I'm looking at our CFO here, I think we probably have about 1,000 to 1,500 corporate customers. These are some of the biggest employers in the country. So names like Google, Atlassian, Salesforce, right, those are really large employers with large employment base. Now the reason why they only have 3% at the moment is that they only really package one thing, which is a car. Now with electric vehicles coming on board, we are seeing a lot more interest in the corporate sector. Now what we have to do now is to transition that interest into orders. So I think it's an interesting space to watch for over the next couple of years. But certainly, within our base, right, although we're known as a government and not a profit organized -- servicing government not-for-profit space, we do have a really large base for corporate clients, which, hopefully, in turn, will contribute a lot more than to do today.

It's not -- we're pricing ourselves out or the competition is still high?

Absolutely.

Just to clarify further, Ray, just to be clear, all of these organizations, global organizations have to report their carbon footprint. And one of the ways to report the carbon footprint is how people get to work. And if they start a driving to work in combustion engines, that's not good. So we only used to be able to lease of any scale combustion engine cars, because the electric vehicles are quite expensive. There weren't any subsidies. Now that the actual leasing cost of electric vehicle is so much lower, and their staff members want to lease electric vehicles all of a sudden, they're encouraging us to come back in, because it helps their whole -- yes.

Okay. Second question was you're talking about a leasing yield of 3%. What do you mean by that? Is that, that you're able to get 3% extra on your interest that you're charging on the lease or what?

Very simply, what happens is, Ray, when we lease a vehicle, we earn a revenue stream from pretty much everything associated with the lease, whether you take a comprehensive insurance policy, whether you source a car, whether we source of finance for you. And so those things the money we earn on that lease is what we call a yield. And so what's happened last year is that our yield from each car that we novate has gone up 3%, right? So which is pretty good, and that increase has come about, because car prices are a little bit higher than they were the previous year.

So it's the extras that you're adding on?

No. Very simply -- so for example, if you were to buy a Toyota -- let's say, a Toyota, the year before, last year, you would probably pay about 15% to 20% more for Toyota, and we make money on lending -- organizing the finance for it. And so that -- because we're organizing the finance for a larger principal amount, we're earning a bit more on that.

I've got a third question, but if anyone else has got something...